Sun, Dec 16, 2018 - Page 16 News List

T-Mobile, Sprint get US security assent for deal: sources

Reuters, WASHINGTON and NEW YORK

T-Mobile US Inc and Sprint Corp expect their merger to be approved by a US national security panel as early as next week, after their respective parent companies said that they would consider curbing their use of equipment from China’s Huawei Technologies Co (華為), people familiar with the matter said.

US government officials have been pressuring T-Mobile’s German majority owner, Deutsche Telekom AG, to stop using Huawei equipment, the sources said, over concerns that Huawei is effectively controlled by the Chinese state and its network equipment might contain “back doors” that could enable cyberespionage, something which Huawei denies.

That pressure is part of the national security review of T-Mobile’s US$26 billion deal to buy US rival Sprint, the sources said.

The Committee on Foreign Investment in the United States (CFIUS) has been conducting a national security review of the Sprint deal, which was announced in April.

Talks between the companies and the US government have not been finalized, and any deal could still fall through, the sources said.

Shares in T-Mobile on the NASDAQ and in Sprint on the New York Stock Exchange were both down 1.2 percent in trading on Friday.

Like all major US wireless carriers, T-Mobile and Sprint do not use Huawei equipment, but their parent companies use Huawei gear in overseas markets.

Sprint’s parent, Softbank Group Corp, plans to replace 4G network equipment from Huawei with hardware from Nokia Oyj and Ericsson AB, the Nikkei Shimbun reported on Thursday, without citing sources.

Deutsche Telekom on Friday said it was reviewing its vendor plans in Germany and other European markets where it operates, given the debate on the security of Chinese network gear.

Sprint, T-Mobile, Deutsche Telekom, Softbank and CFIUS declined to comment.

Huawei has said that the security concerns are unfounded.

Tensions have been heightened by the Dec. 1 arrest of Huawei chief financial officer Meng Wanzhou (孟晚舟) in Canada for possible extradition to the US.

US prosecutors accuse Meng of misleading multinational banks about Iran-linked transactions, putting the banks at risk of breaching US sanctions.

Meng, the daughter of Huawei’s founder, has said she is innocent.

The US Department of Justice and the US Federal Communications Commission must also approve the proposed deal between the third and fourth-largest US wireless carriers.

T-Mobile previously said it expected the deal to close in the first half of next year.

The agreement was reached after four years of on-and-off talks that set the stage for the creation of a company that would compete more favorably with the top two wireless players, Verizon Communications Inc and AT&T Inc.

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